Dunne: Govt to simplify financial arrangements rules

The Government will move to simplify the rules
relating to financial arrangements that are agreements for
the sale and purchase of property or services, Revenue
Minister Peter Dunne announced today.

Mr Dunne said the
changes reflect concerns expressed by a number of business
taxpayers and their representatives over the past few
years.

“The proposed changes will have a beneficial
impact on business taxpayers who sell or buy property or
services. They will be particularly welcomed by businesses
who export and import capital equipment,” he
said.

Taxpayers who prepare financial reports using
International Financial Reporting Standards (IFRS) will now
follow their accounting treatment for taxation purposes for
almost all of these arrangements. The exception will be
capital account transactions other than depreciable
property. Other taxpayers will use simplified rules that
will give similar results.

The amendments will apply from
the 2013/14 income year. However the legislation will allow
IFRS taxpayers to elect to apply the accounting treatment to
new arrangements from the 2011/12 income year.

The changes
will also validate the past treatment of arrangements which
have effectively used methods allowed under the new
rules.

Mr Dunne said that simplifying the rules was
consistent with the Government’s objective of making it
easier for customers to interact with government.

“The
rule changes will mean lower compliance costs, increased
technical compliance and for some, less volatility of
taxable income from year-to-year,” he said.

The
amendments will be included in the next available tax bill,
with draft legislation expected to be released for comment
in March 2013.

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